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Summary

This bestseller has powered the careers of countless professionals. This update to the 11th edition builds on the book's reputation for comprehensiveness, accuracy, and currency, incorporating all the recent changes to the accounting literature. It integrates numerous examples from real corporations throughout the chapters to help readers understand the application of accounting principles and techniques in practice. They'll also find problems that are modeled on the AICPA 'Simulations' _ a new question format designed for the computerized uniform CPA Exam. These problems prepare readers for the exam, testing their ability to read, digest, research and respond to both a numeric problem and a short answer essay.

Table of Contents

CHAPTER 1 Financial Accounting and Accounting Standards

Learning Objectives,

1

(1)

Vignette: The Size of the New York City Phone Book ...,

1

(1)

Preview of Chapter 1

FINANCIAL STATEMENTS AND FINANCIAL REPORTING,

2

(4)

Accounting and Capital Allocation,

3

(1)

The Challenges Facing Financial Accounting,

4

(1)

Objectives of Financial Reporting,

4

(1)

The Need to Develop Standards,

5

(1)

PARTIES INVOLVED IN STANDARDS SETTING,

6

(6)

Securities and Exchange Commission (SEC),

6

(1)

merican Institute of Certified Public Accountants, (AICPA),

7

(1)

Financial Accounting Standards Board (FASB),

8

(3)

Governmental Accounting Standards Board (GASB),

11

(1)

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES,

12

(2)

ISSUES IN FINANCIAL REPORTING,

14

(14)

Standards Setting in a Political Environment,

14

(1)

The Expectations Gap,

15

(1)

International Accounting Standards,

16

(1)

Ethics in the Environment of Financial Accounting,

16

(1)

Conclusion,

17

(1)

Summary of Learning Objectives, Key Terms,

18

(1)

Questions,

19

(1)

Conceptual Cases,

20

(4)

Using Your Judgment: Financial Reporting Problem,

24

(1)

International Reporting Case,

25

(1)

Professional Simulation,

26

(1)

CHAPTER 2 Conceptual Framework Underlying Financial Accounting

27

(34)

Learning Objectives,

27

(1)

Vignette: Show Me the Earnings!,

27

(1)

Preview of Chapter 2

CONCEPTUAL FRAMEWORK,

28

(2)

Need for Conceptual Framework,

28

(1)

Development of Conceptual Framework,

29

(1)

FIRST LEVEL: BASIC OBJECTIVES,

30

(1)

SECOND LEVEL FUNDAMENTAL CONCEPTS,

31

(4)

Qualitative Characteristics of Accounting Information,

31

(3)

Basic Elements,

34

(1)

THIRD LEVEL: RECOGNITION AND MEASUREMENT CONCEPTS,

35

(27)

Basic Assumptions,

36

(2)

Basic Principles of Accounting,

38

(5)

Constraints,

43

(3)

Summary of the Structure,

46

(1)

Summary of Learning Objectives, Key Terms,

47

(1)

Questions,

48

(1)

Brief Exercises,

49

(2)

Exercises,

51

(3)

Conceptual Cases,

54

(4)

Using Your Judgment: Financial Reporting Problem,

58

(1)

Financial Statement Analysis Case,

58

(1)

Comparative Analysis Case,

58

(1)

Research Cases,

58

(1)

International Reporting Case,

59

(1)

Professional Simulation,

60

(1)

CHAPTER 3 The Accounting Information System

61

(62)

Learning Objectives,

61

(1)

Vignette: Needed: A Reliable Information System,

61

(1)

Preview of Chapter 3

ACCOUNTING INFORMATION SYSTEM,

62

(6)

Basic Terminology,

63

(1)

Debits and Credits,

64

(1)

Basic Equation,

64

(2)

Financial Statements and Ownership Structure,

66

(2)

THE ACCOUNTING CYCLE,

68

(18)

Identifying and Recording Transactions and Other Events,

68

(1)

Journalizing,

69

(1)

Posting,

70

(1)

Trial Balance,

71

(1)

Adjusting Entries,

72

(10)

Adjusted Trial Balance,

82

(1)

Closing,

83

(2)

Post-Closing Trial Balance,

85

(1)

Reversing Entries,

85

(1)

The Accounting Cycle Summarized,

86

(1)

USING A WORK SHEET,

86

(6)

Adjustments Entered on the Work Sheet,

86

(2)

Work Sheet Columns,

88

(1)

Preparing Financial Statements from a Work Sheet,

89

(2)

Closing Entries,

91

(1)

Summary of Learning Objectives, Key Terms,

92

(1)

APPENDIX 3A Cash-Basis Accounting versus Accrual-Basic Accounting,

93

(5)

DIFFERENCES BETWEEN CASH AND ACCRUAL BASIS,

93

(2)

CONVERSION FROM CASH BASIS TO ACCRUAL BASIS,

95

(2)

Service Revenue Computation,

95

(1)

Operating Expense Computation,

96

(1)

THEORETICAL WEAKNESSES OF THE CASH BASIS,

97

(1)

Summary of Learning Objective for Appendix 3A, Key Terms,

97

(1)

APPENDIX 3B Using Reversing Entries,

98

(72)

ILLUSTRATION OF REVERSING ENTRIES-ACCRUALS,

98

(1)

ILLUSTRATION OF REVERSING ENTRIES-PREPAYMENTS,

99

(1)

SUMMARY OF REVERSING ENTRIES,

100

(1)

Summary of Learning Objective for Appendix 3B,

100

(1)

Questions,

100

(1)

Brief Exercises,

100

(3)

Exercises,

103

(8)

Problems,

111

(7)

Using Your Judgment: Financial Reporting Problem,

118

(1)

Financial Statement Analysis Case,

118

(1)

Comparative Analysis Case,

119

(1)

Research Case,

119

(1)

Professional Simulations,

120

(3)

CHAPTER 4 Income Statement and Related Information

123

(46)

Learning Objectives,

123

(1)

Vignette: Which Income Number?,

123

(1)

Preview of Chapter 4

INCOME STATEMENT,

124

(3)

Usefulness of the Income Statement,

124

(1)

Limitations of the Income Statement,

125

(1)

Quality of Earnings,

125

(2)

FORMAT OF THE INCOME STATEMENT,

127

(7)

Elements of the Income Statement,

127

(1)

Single-Step Income Statements,

128

(1)

Multiple-Step Income Statements,

129

(1)

Condensed Income Statements,

130

(4)

REPORTING IRREGULAR ITEM Discontinued Operations,

134

(7)

Extraordinary Items,

135

(2)

Unusual Gains and Losses,

137

(2)

Changes in Accounting Principle,

139

(1)

Changes in Estimates,

140

(1)

Summary of Irregular Items,

140

(1)

SPECIAL REPORTING ISSUES,

141

(29)

Intraperiod Tax Allocation,

141

(2)

Earnings per Share,

143

(1)

Retained Earnings Statement,

144

(1)

Comprehensive Income,

145

(3)

Summary of Learning Objectives, Key Terms,

148

(1)

Questions,

149

(2)

Brief Exercises,

151

(1)

Exercises,

152

(4)

Problems,

156

(3)

Conceptual Cases,

159

(4)

Using Your Judgment: Financial Reporting Problem,

163

(1)

Financial Statement Analysis Cases,

164

(1)

Comparative Analysis Case,

165

(1)

Research Cases,

165

(1)

International Reporting Case,

166

(1)

Professional Simulation,

167

(2)

CHAPTER 5 Balance Sheet and Statement of Cash Flows

169

(82)

Learning Objectives,

169

(1)

Vignette: "There Ought to Be a Law,"

169

(1)

Preview of Chapter 5

SECTION 1 BALANCE SHEET,

170

(20)

USEFULNESS OF THE BALANCE SHEET,

170

(1)

LIMITATIONS OF THE BALANCE SHEET,

171

(1)

CLASSIFICATION IN THE BALANCE SHEET,

172

(1)

Current Assets,

173

(4)

Non-Current Assets,

177

(2)

Liabilities,

179

(3)

Owners' Equity,

182

(1)

Balance Sheet Format,

182

(3)

ADDITIONAL INFORMATION RPM EE Contingencies,

185

(1)

Accounting Policies,

185

(1)

Contractual Situations,

186

(1)

Fair Values,

186

(1)

Ant OF DISCLOS

Parenthetical Explanations,

187

(1)

Notes,

187

(1)

Cross References and Contra Items,

188

(1)

Supporting Schedules,

189

(1)

Terminology,

189

(1)

SECTION 2 STATEMENT OF CASH ROWS.

190

(10)

PURPOSE OF THE STATEMENT OF CASH CONTENT AND FORMAT OF THE STATEMENT OF CASH FLOWS,

191

(2)

PREPARATION OF THE STATEMENT OF CASH FLOWS,

193

(2)

USEFULNESS OF THE STATEMENT OF CASH FLOWS,

195

(1)

Financial Liquidity,

196

(1)

Financial Flexibility,

197

(1)

Free Cash Flow,

197

(1)

Summary of Learning Objectives, Key Terms,

198

(2)

APPENDIX 5A Ratio Analysis-A Reference,

200

(2)

USING RATIOS TO ANALYZE FINANCIAL PERFORMANCE,

200

(2)

Summary of Learning Objectives for Appendix 5A, Key Terms,

201

(1)

APPENDIX 5B Specimen Financial Statement: 3M Company,

202

(27)

Questions,

229

(1)

Brief Exercises,

230

(1)

Exercises,

231

(8)

Problems,

239

(4)

Conceptual Cases,

243

(3)

Using Your Judgment: Financial Reporting Problem,

246

(1)

Financial Statement Analysis Cases,

247

(1)

Comparative Analysis Case,

248

(1)

Research Case,

248

(1)

International Reporting Case,

249

(1)

Professional Simulation,

250

(1)

CHAPTER 6 Accounting and the Time Value of Money

251

(62)

Learning Objectives,

251

(1)

Vignette: The Magic of Interest,

251

(1)

Preview of Chapter 6

BASIC TIME VALUE CONCEPTS,

252

(7)

Applications of Time Value

Concepts,

252

(1)

The Nature of Interest,

253

(1)

Simple Interest,

254

(1)

Compound Interest,

254

(4)

Fundamental Variables,

258

(1)

SINGLE-SUM PROBLEMS,

259

(5)

Future Value of a Single Sum,

259

(2)

Present Value of a Single Sum,

261

(2)

Solving for Other Unknowns in Single-Sum Problems,

263

(1)

ANNUITIES,

264

(11)

Future Value of an Ordinary Annuity,

265

(2)

Future Value of an Annuity Due,

267

(1)

Illustrations of Future Value of Annuity

Problems,

268

(2)

Present Value of an Ordinary Annuity,

270

(2)

Present Value of an Annuity Due,

272

(1)

Illustrations of Present Value of Annuity Problems,

273

(2)

MORE COMPLEX SITUATIONS,

275

(4)

Deferred Annuities,

275

(2)

Valuation of Long-Term Bonds,

277

(1)

Effective Interest Method of Amortization of Bond Discount or Premium,